The ever-present BUSEN, the ever-changing "Baozong"
Zebra Consumer Shen Tuo
Over the past 9 years, the actual controller of ST Busen has changed frequently, and now it is highly likely to fall into the hands of Baoji State-owned Assets.
In recent years, various well-known Chinese men's clothing brands have been transforming and expanding vigorously, but ST Busen has had a rough ride. Each change of controller brought different ideas, ultimately leading to the failure to maintain the core business and leaving a mess behind.
However, all this has little to do with the founding Zhuji Shou family. Nine years ago, the Shou family cashed out and left. Looking back now, it seems like a wise choice.
Ever-Changing Controllers
If nothing unexpected happens, the new actual controller of ST Busen (002569.SZ) will be announced today.
According to the company's announcement, Baoji Caihua, in order to gain control of ST Busen, has planned to participate in the online judicial auction held by the Tianjin No. 2 Intermediate Court on the 13th and 14th of this month, aiming to bid for all approximately 21 million shares to be disposed of (held by Dongfang Hengzheng).
As early as mid-May, the company's controlling shareholder Dongfang Hengzheng and actual controller Wang Yazhu had signed a voting rights entrustment agreement with Baoji Caihua, intending to unconditionally, fully, and irrevocably entrust the voting rights corresponding to a total of 39 million shares (27.19% of the total shares) to Baoji Caihua. The latter has also expressed its intention to acquire the company's control through voting rights entrustment and participation in judicial auctions.
If the auction is successful, this will be the 6th change of control for ST Busen, with the actual controller becoming Baoji State-owned Assets.
Among listed Chinese apparel companies, frequent changes of control are rare. ST Busen is an extreme case, where the main motive for changing controllers was to seek transformation, but a single misstep completely altered the company's fate.
In March 2015, the company's controlling shareholder Busen Group reached a share transfer agreement with Shanghai Ruizhi and Dasen Investment. Shanghai Ruizhi acquired 41.8 million shares from Busen Group, and individual Qiu Li acquired a total of 14 million shares from Dasen Investment and Busen Group. After the transfer, the company's controlling shareholder became Shanghai Ruizhi, holding 29.86% of the shares, and the actual controllers became Yang Chen, Tian Yu, Mao Guiliang, and Liu Jing.
After breaking free from the control of the Zhuji Shou family, ST Busen became a shell resource manipulated by various capital players.
In June 2016, Xu Maodong, the head of Xinghe Capital, acquired 95.02% of Shanghai Ruizhi's shares for 1.012 billion yuan, becoming the new actual controller.
In October 2017, Shanghai Ruizhi transferred 16% of its shares in Busen to Anjian Technology and entrusted the voting rights of 19.4 million shares. Anjian Technology thus controlled 29.86% of the company's voting rights, becoming the controlling shareholder, and the actual controller changed from Xu Maodong to Zhao Chunxia.
In April 2019, the 22.4 million shares (16% of the total shares) held by Anjian Technology were judicially auctioned, with Dongfang Hengzheng becoming the largest shareholder. After a "power struggle," the boss became Wang Chunjiang.
In August 2021, Wang Chunjiang, who was abroad, irrevocably entrusted 60% of the voting rights of Dongfang Hengzheng to his mother-in-law Wang Yazhu, and the company's actual controller changed once again.
Neglected Core Business
ST Busen has continuously stepped into pitfalls, always encountering the wrong people.
Since the Shou family let go, almost every controller of the company has had ulterior motives, especially Xu Maodong, Zhao Chunxia, and Wang Chunjiang.
Xu once halted the company's project to produce 400,000 high-end jackets annually and led the company toward transforming into a financial services platform. The result was much ado about nothing, with only Xinghe Financial Services established in Beijing. Later, the company was also embroiled in loan disputes.
Behind Zhao was the online lending platform iTouzi, which ambitiously aimed to make internet finance the company's future direction. However, the platform collapsed, and she fled overseas.
As the actual controller of Xin Hui Pay and Yilian Pay, Wang Chunjiang also attempted to make a mark in the financial business after taking control of ST Busen, but with little success.
With reckless attempts in the financial sector and the slowdown of China's apparel industry, Busen's core clothing business has declined sharply.
The company's clothing sales dropped from 2.7029 million pieces in 2015 to 1.1478 million pieces in 2023. During the same period, revenue from clothing manufacturing fell from 402 million yuan to 115 million yuan.
By the end of last year, the company had only 220 directly operated and franchised stores left, nearly halving from the 427 stores in 2019.
The company's operating conditions have worsened year by year, with revenue dropping from 420 million yuan in 2015 to 144 million yuan in 2023. It reported losses in 5 out of the past 9 years, with non-GAAP net losses for 9 consecutive years totaling over 400 million yuan.
In the first quarter of this year, the company's performance still showed no signs of improvement. It recorded revenue of 35.67 million yuan, a net loss attributable to shareholders of 7.997 million yuan (down 14.84% and 289.49% year-on-year, respectively), and a non-GAAP net loss of 8.011 million yuan.
The company's personnel are also in flux. In early January, the company appointed Li Xiaoling as CFO, but she resigned just five months later, with Ai Shaoyuan, the company's director and deputy general manager, temporarily taking over her duties.
Ai Shaoyuan is the executive director and general manager of Xianhua Holdings, one of the major contributors to Baoji Caihua.
In 2021, Ai Shaoyuan served as co-general manager of ST Busen. That year, the company signed a 1.65 billion yuan investment agreement in Baoji to build a northwest production base.
A Regrettable Legacy Brand
In the hit TV series "Blossoms Shanghai" earlier this year, Zhuji was portrayed as the origin of high-quality counterfeit sweaters that the protagonist "Bao" was willing to venture into alone. The success of Zhuji's apparel products in Shanghai was largely due to the region's developed textile industry.
Over the past 40-plus years, Zhuji, a small city in central Zhejiang, has developed a complete industrial chain from spinning, weaving, dyeing, to garment processing, becoming a key national textile and apparel production base.
Busen was born on this fertile ground.
In the 1980s, founder Shou Caifeng started with a sewing machine and later became the technical head of a town-owned garment factory. In the 1990s, she even worked in garment factories in the Pearl River Delta, "stealing" techniques and management experience from joint ventures.
In 1993, Shou Caifeng established Busen Garments in Zhuji. From the beginning, Busen focused on men's formalwear—suits, shirts, trousers, and jackets—growing into a strong brand that once stood alongside Youngor, Shan Shan, and Peacebird as leaders in China's men's formalwear.
In 2000, the company upgraded to Busen Group, and Shou Caifeng handed over the business to her brother Chen Neng'en. Under Chen's leadership, Busen expanded further, venturing into real estate and trade beyond apparel, becoming a well-known private enterprise in Zhuji.
From the start, this private enterprise had strong family ties, with 11 of the group's 14 shareholders being members of the Shou family. After Chen Neng'en, the reins were passed to Shou Caifeng's son Chen Jianfei.
In 2011, Chen Jianfei led the company to list on the Shenzhen Stock Exchange, ushering in a new phase of development. Despite gaining the advantages of a listed platform, Busen struggled, especially as the apparel market slowed, leading to its first loss in 2014.
The following year, Busen Group transferred control of the company to Shanghai Ruizhi, bidding farewell to the capital market.
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